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Stock Buybacks Soar to Another Record

Chip East

By Michael Rainey

July 16, 2018

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U.S. companies announced more than $346 billion in share buybacks in the second quarter of 2018, according to data released by the investment research firm TrimTabs last week, shattering the previous record of $242 billion set in the first quarter of the year.

Sixty-three firms announced buybacks of more than $1 billion during the quarter, with Apple’s $100 billion buyback plan leading the way, the research firm said. The total included 19 financial services firms announcing a combined $112 billion in buybacks.

“Corporate America’s actions suggest that most of the benefits of the corporate tax cut will flow to investors in general and top corporate executives in particular,” TrimTabs said, according to the Financial Times.

The buybacks may not be having quite the intended effect, however. Critics say the purchases are meant to boost stocks and thereby further enrich senior executives, whose compensation is typically tied to share prices. But The Wall Street Journal reported last week that the buybacks aren’t doing much to increase share prices. Of the roughly 350 companies in the S&P 500 that have announced share buybacks this year, 57 percent are actually underperforming the index as a whole (as of July 8).